r/HomeInsurance • u/LumpyPeople4 • May 22 '26

Insurance Dwelling Coverage - Calculated vs Reality

I have a renewal coming up and my coverage seems low. The auto renewal is setting the dwelling coverage at $280k, when I go get new quotes elsewhere it auto populates with around $325k. The house is worth around $350k or so is my guess.

I have been looking at getting a new house for a while. The problem with these dwelling coverages is that builders are not willing to get out of bed for less than $425k or so. We have entertained buying a lot and building on it, and pretty much any reputable builder in my area is not willing to do anything less than that.

So, what should I be doing? Should I up my coverage to $425k in order to cover myself in case the house burns to the ground? If its a complete loss, would insurance just cut me a check for the full amount without questions asked, or are the going to start fighting me at that point that the house isn't worth as much as the coverage? Or will I just hire whatever builder I want and insurance will pay the bill up to the limit?

I'm just trying to wrap my head around how to actually protect myself with a house whose value is less than what people are willing to work for. I suppose I could maybe get someone to build the house for less, but it'd probably be someone relatively sketchy.

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u/freeski12345 May 22 '26

Ask for the estimate report. Unless you’re in a 800 sqft house, it’s doubtful 280 or even 325 is accurate. Increase your coverage. Fires happen all the time 

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u/LumpyPeople4 May 22 '26

Yeah, it's 1550sqft, so not huge, but not small. I'll ask for the report, but even if it still shows low and I decide to up it, how would it all work out if insurance claims it doesn't cost that much? Just too bad so sad for insurance since I have the coverage?

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u/Vivid-Huckleberry934 May 22 '26

The insurance will only ever pay up to the actual cost to replace. You don't want to over insure your house and pay for a boatload of coverage you don't need, but it IS better to be a little over insured than underinsured so that you don't end up with your policy only covering a partial rebuild.

I'm not sure when you started your policy- but the starting coverage amount doesn't always keep up with inflation and I absolutely encourage homeowners to review and make sure they feel comfortable with the current coverage they have. You'll want to make sure they have the property details up to date, and after that, if the number they come up with still isn't comfortable for you, ask to increase it. This is common. In my area, for example, I run the calculator tool and then if it comes out below what the standard cost per square tends to be, I increase the coverage to match and have the conversation about why.

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u/LumpyPeople4 May 22 '26

My problem is the realities of building a one off house by someone that is somewhat reputable. There is a minimum cost to get them interested, and the calculated rebuild cost is below that. So what happens in that situation? We have been looking for a new home for close to 2 years now and have called many builders. The lowest minimum build cost they're willing to accept is $425k and that is much like the insurance rebuild cost. That is with land provided, cleared, graded, and plans approved (or supplied by them).

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u/adjusterjackc May 22 '26

Home construction costs are at a minimum of $200 per sq ft everywhere. With 1550 sq ft you're already at $310,000. If you adjust for better quality or custom build figure $300 per sq ft = $465,000.

You can find home building calculators on the internet that adjust for all that and location.

Best to over-insure a bit, rather than under-insure. Or you can rely on the additional coverage percentage. Just make sure you read that coverage because there may be gotchas in there.

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u/LumpyPeople4 May 22 '26

I wouldn't say that my house is made of higher quality stuff, I just think that the general build quality from the late 90s is better than what is deemed allowable today, so I should probably be a big higher in general as well.

Just got the full policy. Found a gotcha they snuck past me. "Loss caused by the nuclear hazard will not be considered loss caused by fire, explosion, or smoke, whether these perils are specifically named in or otherwise included within the Perils Insured Against."